Outpave | Application Preview
Outpave is seeking government grants between $800,000 and $1.8 million to fund its business initiatives, which include a planned loan of $1 million with interest payments accounted for in projected expenses. The company is targeting the Spend Management sector, particularly for small to mid-sized businesses (SMBs). Current solutions in the market are often too expensive or lack robust expense tracking, creating an opportunity for Outpave to attract customers transitioning from outdated spreadsheet systems. They aim to capture 0.053% of the $16.4 billion total addressable market by 2026, projecting $8.7 million in revenue by Q4 of that year.
Outpave's strategy includes increasing the average employee count per customer and achieving a total customer base of 2,053 by the end of 2026. Revenue streams will also come from interchange fees and partnerships with credit card processors.
The application emphasizes Outpave's competitive advantage rooted in industry experience, a user-friendly design that eliminates traditional expense reports, and leveraging fintech innovations to stand out in the market. Their approach to Spend Management targets the specific needs of SMBs, while most existing competitors focus on enterprise-level functions that are unnecessary for this demographic.
Key competitors include Concur, Brex, Coupa, and Expensify, all of which struggle with high costs, innovation constraints, and focus on enterprise solutions rather than SMB needs. Outpave positions itself as a cost-effective alternative, without the technical debt of larger players, emphasizing simplicity and strong customer service.
Overall, Outpave's application argues for funding based on their focus, technology, and ability to meet an underserved market, with a clear plan to differentiate themselves from established competitors.
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General Information
Business Registration Number: 92-1952894
Location: St Paul, MN, United States
Length of Operation: 1-5
Number of Employees: 11-25 Employees
Annual Gross Income: Less than $100k
Annual Gross Expense: Less than $100k
Open to Loans: YES
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Funding Usage
$800,000 to 1,800,000. While a single source of funding is of interest, Outpave will seek funding from different sources as needed. The P&L projections assume a loan of 1,000,000 and interest payments against this loan are factored into the expenses.
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Business Plan
- The business plan for Outpave is structured around 3 solutions. The first phase targets Spend Management for project-based businesses. This focus is intentional, and it was formulated based on the awareness of the competition in the Spend Management market. The current Spend Management solutions for small to mid-size business are either too costly for the typical SMB business, or the lower cost options in the market do not have adequate expense tracking against projects and cost objects. A significant portion of the attainable market is also to entice businesses to move from antiquated spreadsheet based forms to the Outpave solution. This method of Spend Management remains prevalent in the SMB market. The total addressable market for Spend Management solutions is recognized to be 16.4 BB. o Outpave is confident in attaining .00053 (.053%) of this market by the end of 2026. o This accounts for 8,692,000 in Revenue in Q4, 2026 - It is expected that the early customers will be small. However, over time and with a more proven track record, the average users per customer will increase. The projected average employee count per customer in Q4, 2026 is still a modest 75 employees. Furthermore, the total customer count to realize the projected revenue stream in 2,053 as of the end of 2026. o The average cost per customer for the revenue base would be $899 o The other $6,812,342 in revenue would come from the interchange fees and contracted agreements with the credit card processing partner that powers the Outpave cards. - Why should investors award the funding amount? o Industry experience in Engineering Software as a Service solutions. o Leadership experience in the spend management market. o A solution design and concept that eliminates the expense report. o Leveraging “fintech” into the Outpave solution to differentiate from most of the competition o A solution that is built from the ground up with ease-of-use and simplicity as the guiding principles. o Adoption of the newest, most cost effective platform technology and building blocks, coupled with innovation. o Outpave has a specific market focus. The ‘market leaders’ are focused on features that are needed for global customers as well as integrated travel functionality. Both of these pursuits require massive levels of investment. This ROI on this investment is spread across all customers in their portfolio. This leaves a wide gap of opportunity to enter the market with a combination of a feature rich solution for the target market and with attractive margins. o Outpave solution is primed to convince business to move away from spreadsheet based, manual Expense Management solutions.
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Self Identified Competition
Our competitors include Concur, Brex, Team Pay, Coupa, and Expensify. However, we differentiate ourselves through our ease of use, affordable pricing, and robust reporting capabilities. We plan to compete by offering a superior product for focused markets and through exceptional customer service. The competitive understanding of the market leaders in Spend Management reveals that these businesses are focused on two general areas that are not needed in the SMB market. These include: - Enterprise level international features. o Features such as global tax functionality and travel allowance features are complex and require substantial engineering efforts. - Travel Integration o Travel booking in and of itself is a highly competitive market. The market leaders are all chasing an embedded and seamless end-to-end travel booking to expense report processing experience. While useful conceptually, this is also a massive effort in engineering and product development. This effort exceeds the benefit for a few simple reasons. ▪ Often the best rate is not available from the embedded travel functionality of an end-to-end solution. An open booking policy allows the traveler to find the best rates from any source. ▪ A simple pre-trip approval with spending limits can have the same impact as a feature rich, expensive integrated travel solution. ▪ The main value of integrated travel and expense is the ability to associate the spend that occurs on a business trip, to the booked itinerary. The value of all the other benefits are overstated and expensive to build. ● The OCR and AI driven features of the Phase Platform reads the trip itinerary and includes these details with the expense transactions for customers that chose to have this reference data with the expense report data. ● While Phase will look for Travel Partners, the level of investment and effort will be a simple punch out to travel content providers. - Concur: The SAP Concur solution is offered at a high cost for small to midsize businesses. It also does not offer virtual card functionality and customer service is not a strong suit. Additionally, the implementation time frame is unreasonably long. SAP Concur is also increasingly focused on the Enterprise market as they strive to attach Concur Expense to the SAP ERP installed base. As the long-time market leader, Concur is also working through significant technical debt that will hinder innovation. While Concur will continue to be the market leader in Enterprise, its position in the SMB space will come under increasing pressure. While they could drop their price to SMB customers, SAP is not a company that accepts low margin business. - Brex: While Brex was off to a fast start in the industry, they have pivoted to focus on the Enterprise market. As confirmation of this point, they announced the cancellation of contracts for more than 11,000 SMB customers. While they have raised substantial financing, the venture capital management behind the cash insertion is pushing Brex to focus on the Enterprise market. Not surprisingly they have also announced Brex Travel. It can be anticipated that much of the focus of the engineering and innovation that is the focus of Brex in the years ahead will be to integrate this new Travel solution with their existing Spend Management functionality. - Navana: The only unique aspect of Navana relative to the two competitors above is that they started as a travel booking company called Trip Actions. They are in the process of adding Spend Management to their solution. They are also pivoting their focus to the Enterprise market. - Coupa: Thomas Bravo, a software investment company, has recently acquired Coupa. This was an all-cash transaction that will close in H1 2023. The purchase includes a significant investment from the Abu Dhabi Investment Authority (ADIA). The acquisition price represented a 77% premium of the share price. While Coupa is not chasing the integrated travel experience, they are mostly focused on Supply Chain. This separates Coupa from the other competitors that have a heavier focus on procurement, travel integration and expense management. A common trend in investment firm acquisitions is also to cut costs and attempt to retain the same level of revenues. This has a high potential to constrain innovation. Additionally, to capture a return on investment as quickly as possible, Coupa can be expected to also focus on signing larger Enterprise contracts. - Divy - As a newly acquired business, Divy will have to invest a great deal of focus on their integration with Bill.com. While the public comments from the parent company Bill.com have validity, the assimilation of an acquired company also introduces distraction and the common risk of talent and customer loss that these situations create. One public comment is below: o "We see the combination of Bill.com and Divvy as potentially very valuable to small and mid-sized businesses because it creates a single software company focused on helping them to manage, track and control all their business-to-business spending versus them having to stitch together a number of point solutions." - Expensify: After a period of relatively solid growth, Expensify is struggling through a difficult period. Leadership points to the global economic environment as the main cause of the declining revenues. However, this is suspect due to the extent of their decline and simple rationale. Review of their financial statements also reveals that only 14.6% of their cost is focused on Research and Development. At the same time, Expensify has announced a $50MM stock repurchase plan. While this move could make sense since the share price is close to all time lows, it is probably more the case where the company has become too highly diluted over their relatively short history. The company is also relying heavily on stock based compensation. While this is not uncommon for start-ups, for a public company if the share price continues to underperform, the company could face a talent drain. In the most recent financials, the company reported a loss of $27.0 MM compared to $13.8 MM the previous year. Expensify appears to be on shaky ground and burdened by a high cost structure that distracts attention from innovation. This is also occurring at a time when innovation will redefine the Spend Management market. Lastly, Expensify is stepping into the Payroll space. It is believed that this will be another derailer. - TeamPay: After a recent round of Series B funding, TeamPay has raised $79.8MM across 21 investors. They also have $11.8 MM in debt financing. These two factors are likely to be driving a more hectic push for growth that is likely inefficient. While it’s a subjective comment, it appears that their web presence and digital marketing is more polished than their solution and strategy. o Interviews with sales personnel at Team Pay revealed three telling points. 1. The do not have a market specific focus. Simply put, the sales teams target where they feel that can generate the most business. ● “Our low-hanging fruits are those who understand the convenience so we appeal directly to startups, or organizations that are essentially growing organically like us.” Phase would consider this lack of strategic focus a losing strategy. 2. Another weakness of Team Pay is their integration capabilities. ● Sources note that the most persistent comment about TeamPay’s solutions are related to pricing and limitations, specifically around integration with existing systems and limited functionality compared to other competitors in the market. 3. Team Pay also acknowledges a focus on start-ups. Sources also comment that customers often outgrow their functionality and is a source of attrition. The market specific focus of Phase is aimed at avoiding this scenario. The details were covered in previous sections, but here is a summary. o Expertise in Engineering and Spend Management o Modern technology without embedded technical debt of the market leaders o Relentless focus on ease-of-use and simplicity o A fintech solution that affords Outpave the revenue streams it needs to grow while at the same time offering customers an extremely affordable solution.
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